US 340B abuses are fueling higher Medicare costs

The USA’s 340B hospital markup program is costing taxpayers an estimated $13.4 billion a year in lost Medicare rebates, according to a new report from Berkeley Research Group (BRG).

When hospitals purchase medicines at the 340B price, Medicare cannot collect rebates intended to reduce federal spending. This means that as more tax-exempt hospitals exploit the 340B program as a profit center, Medicare costs also rise. This number is expected to continue to increase due to program growth and additional lost inflation rebates.

Responding the finding, US trade group Pharmaceutical Research and Manufacturers of America (PhRMA) said that why this matters is that rebates are meant to lower Medicare drug spending. However as more tax-exempt hospitals exploit the 340B program as a profit center, Medicare misses out on more rebates. This is a hidden tax on patients, taxpayers and employers.